On TOMS Shoes

TOMS Shoes is a company with an extraordinary premise: with every pair of TOMS they sell, they also give a pair of new shoes to a child in need in places like Argentina, Ethiopia, and South Africa. The shoes protect children from cuts, sores, and soil-transmitted diseases that can penetrate the skin through bare feet, and they also complete the uniform they need to attend school. The TOMS One for One business model has resulted in more than a half-million pairs of new shoes given to children around the world, including the U.S. through its giving partners.

TOMS is the fifth different business founded by 33-year-old Blake Mycoskie. Earlier start-ups include a door-to-door laundry company and an online driver’s education school. Former President Clinton has called Mycoskie “one of the most interesting entrepreneurs (I’ve) ever met,” and the company and its founder have been covered by Time, People, CBS News, and scores of other media. While in Chicago for a “Style Your Sole” event at the Steelcase showroom, Mycoskie sat down with Threesixty to discuss the TOMS sustainable business model.

Where did the idea for TOMS come from?

I was on vacation in Argentina and met a few women at a café who were doing a volunteer shoe drive. They were going around to the wealthy people in Buenos Aires, collecting slightly used shoes, and then putting them on these children about two hours outside of the city who desperately needed shoes to go to school. I went with them, and it was something amazing. I saw all these incredibly compassionate, loving people, getting on their hands and knees, putting these shoes on these kids’ feet.

How did that lead to the One for One model?

On the one hand, I was really touched, but on the other hand a little bit concerned. I thought, these volunteers are going to go home, and these kids are going to grow out of these shoes, or they’re going to wear out of them. Who’s going to give the next pair of shoes? How is this really going to be sustained? I thought there needed to be a better way than just the typical charity model. So I came up with this idea: instead of starting a charity, what if we start a business, a for-profit company, where every time we sold a pair of shoes, we gave a pair away? That way we wouldn’t be dependent on donations and foundations.

You wanted to avoid a traditional charitable giving model?

I worried about sustainability. I kept thinking, if I start a charity, maybe the first year would be great: my parents and friends and family would donate, and I’d buy shoes and give them to my kids. Maybe the second year would be great, but then what happens if you have something like Hurricane Katrina and I go to my supporters and they say, “Well, we’re donating to Hurricane Katrina relief?” Rightfully so, but what am I going to tell the kids that are used to wearing shoes now? I never want to be in that position, and that’s one of the reasons why I decided to create this one-for-one model.

Was that a life-changing moment for you?

That would be really romantic, but the truth is, no. When I had the idea, it was just that, an idea, it was a hypothetical. But when life really did change, when it really got turned upside down, was when I was on that first TOMS Shoe Drop. When I was putting these shoes on kids, it was just amazing. That was when I knew this is my calling, this is what I’m supposed to be doing with the entrepreneurial skills and gifts that I have been given.

Is TOMS a sustainable business?

I used the capital from selling my last business to my old partners to fund TOMS. We’ve never had to go to an investor, it’s been completely self-funded, so we can stay true to our giving philosophy in our business the way that we want to and not the way that maybe an investor or someone else of influence would want. I’m an entrepreneur. I want to build a business. But at the same time, profit is not the main thing driving the business. It’s important that we’re profitable, and this year we will be for the first time, because that’s the only way you can truly have sustainability. Ultimately, I’m trying to create something that’s going to be here long after I’m gone.

You’re defining sustainability in a different way…

You hear a lot about sustainability in all different realms now. Definitely on the environmental side, on the business practice side, etc. For me, sustainability is knowing that when I give a child a pair of shoes, that when they wear them out or grow out of them, they’ll be able to get another pair, and another pair. We’re going to keep them in shoes because that allows them to go to school and prevents foot diseases. For us to truly say we’re sustainable, we have to not only build a business so we are allowed to continue to give shoes by selling shoes, but we also build profits so if we have a bad season, we can continue to give shoes. The fashion business is very cyclical; that’s just part of the business.

Blake Mycoskie and some recent recipients of TOMS Shoes.

What about the environmental aspect of sustainability?

We’re working on it. Not every practice is as good as it could be, but we’re getting there. We’re focusing, for example, on what we can do in our office. We have a “green team” that really has helped change a lot of our internal practices, some as simple as not using bottled water in the office, using coffee mugs instead of paper cups, and saving all the packaging that comes into our headquarters to reuse for sending things out.

How sustainable is TOMS manufacturing?

We manufacture now in Argentina, Ethiopia, and China. It’s based on where we’re giving. We’re trying to eliminate or reduce transport and energy and cost. We require that the factories operate under sound labor conditions, pay fair wages, and follow local labor standards, and a code of conduct is signed by all factories. Our production staff routinely visits these factories to make sure they are maintaining these working standards. We also have third parties audit the factories at least once a year to ensure they adhere to proper labor regulations. In fact, we recently had to part ways with a supplier over healthy and safety concerns.

Are TOMS shoes sustainable products?

One of the new materials we introduced this year looks like a normal canvas, but it’s actually made with 70% recycled plastic bottles and 30% hemp. It’s very environmentally sustainable, it’s very strong. Many of our shoes use pesticide-free cotton canvas, and recycled rubber scraps in the bottom unit material. Starting next spring the TOMS shoebox will be completely redesigned with post-consumer recycled paper and soy inks. We’re experimenting with new types of materials for our shoes and constantly improving, but we have a long way to go.

Does every TOMS employee get a chance to distribute the shoes to kids?

We pay for every single employee at TOMS — and we have 72 full-time people– to go on a Shoe Drop once every two years. That requires everyone to work as a team, because you can’t leave for two weeks unless you have someone who can do at least part of your job while you’re gone. So no one becomes the holder of the information. It requires more teamwork this way. It also costs us about $3,000 each time we send someone. But when they come back they are so inspired and excited and energized — and then they energize and excite everyone else!